London, 12 May 2010

An influential lobby group has called on the EC to tighten up rules on auctioning EUAs from 2013. The International Emissions Trading Association (Ieta) today published a letter urging EU member states to sell allowances for the third phase of the scheme on one single auctioning platform. The European commission (EC) is proposing to allow member states, such as Germany and the UK, to set up their own platforms, a move strongly opposed by France.

But Ieta is concerned that allowing countries to start up their own auctions will dilute liquidity and the lobby group wants the commission to have more powers to veto proposals from member states to opt out of a single platform.

While Germany and the UK, the two biggest emitters in the bloc, want to host their own auctions, the European Climate Exchange, the world’s biggest carbon bourse, is understood to agree with Ieta’s position.

The lobby group also wants the EU executive to specify a timetable for when it will start to auction allowances, as well as declare the volume of EUAs that will be available for early auctioning.

The issue of early auctioning is a thorny one, as many utilities are keen to see large volumes auctioned to help them hedge their forward power sales.

Last week, German generator RWE called for the commission to auction between 100 and 300 million allowances per year before the start of the third phase, in 2013.

Analysts at Deutsche Bank reckons around 350 million allowances are needed before the start of the phase, on top of additional measures, to stop an immediate spike in prices.

The commission has targeted a EUR30 price for carbon in the EU cap-and-trade scheme to drive sufficient investment to propel the bloc towards a low carbon future.

Benchmark EUA prices are currently around EUR 16.

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